ENTERPRISES WITH WARPED FINANCING MODELS: PREVALENCE AND IMPLICATIONS
DOI:
https://doi.org/10.15407/economyukr.2024.07.032Keywords:
zombie enterprises; quasi-risk financing model; unscrupulous financing model; institutional environment; tax revenuesAbstract
In 1996-2020, as a result of distortions in the institutional environment in Ukraine, enterprises with twisted financing system became widespread. In addition to zombie enterprises, an active studying of which around the world began after the 1990s crisis in Japan, Ukraine may also feature enterprises that inflate their expenditures using borrowings and loans from related offshore lenders (enterprises with quasi-risk financing model) and enterprises that mostly function on commercial loan which is more than standard 60 days delinquent (enterprises with unscrupulous financing model).
The prevalence of such enterprises in Ukrainian economy was assessed, their impact on tax revenues in the country was determined. Calculations of the shares of each type of enterprises with warped financing models by individual industries were performed based on representative sample for the period 2007-2019, basic econometric modeling of the impact of such enterprises on tax revenues in general and by main taxes was carried out. Correlation matrices of the studied parameters were given.
It was determined that, despite the extremely high share of enterprises with warped financing models, their direct impact on tax revenues is limited. In particular, the modeling confirmed only a directly proportional relationship between the share of zombie enterprises and total tax revenues to the state budget within the 99% confidence interval, and a directly proportional relationship between the shares of zombie enterprises and enterprises with unscrupulous financing model and VAT revenues within 90% confidence interval. A number of correlations which cannot be confirmed based on available statistics were identified.
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